Redefining Revenue Cycle Management in Hospitals from Patient-to-Payment℠

By nThrive | Last Updated: 08/19/2019

Revenue Cycle Management (RCM) includes all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue.

Health care leaders have traditionally relied on disparate administrative and clinical functions to optimize the revenue cycle from beginning to end. Organized end-to-end into three major areas – Patient Access Solutions, Mid Revenue Cycle Solutions and Patient Financial Services – it is within these operational silos that critical information has historically been captured and processed to bill for provided services.

Conventional wisdom holds that improvements and efficiency gains contained within each of the revenue cycle management functions collectively adds up to higher rates of return, albeit slower than most chief financial officers might like – especially in today’s challenging economic climate.

Based on trends identified through market analysis and client inputs, we believe current market forces – from rising patient liability to consumerism – are driving the need to go beyond incremental improvement in the revenue cycle to true transformation. The time is now to break down silos, holistically connecting the revenue cycle from Patient-to-Payment℠ to comprehend dependencies which, if neglected, can create costly breakdowns in the system.

How do we define Patient-to-Payment?

In simple terms, Patient-to-Payment is all about helping health care providers get paid faster and more accurately by simplifying complexities and eliminating administrative burden, both within and between the revenue cycle functions. Beginning at the point of access, it is all about supporting organizations with strategies and capabilities throughout the patient journey, resulting in appropriate and timely payment.

On a macro level, Patient-to-Payment strives for complete revenue cycle optimization, holistically solving business challenges across the entire spectrum of the revenue cycle. To do so requires a micro view, examining operations occurring at every step of the process and how they affect outcomes and success.

The front of the RCM process, also known as Patient Access, typically covers scheduling, registration, financial clearance and patient collection, as well as pricing and compliance. Within the middle, which is comprised of Health Information Management (HIM) and charge integrity, resides charge capture, clinical documentation integrity, medical coding, case management, utilization review and other functions. At the back of RCM is the billing engine, including claims processing, contract management, denial management, payment posting and accounts receivable (A/R) follow-up, as well as reporting and benchmarking.

Building a foundation

Patient Access is the foundation for the entire revenue cycle management process across all functional areas. Front office solutions can minimize denials and rework at the back end of the RCM process, streamlining point of service collections and increasing patient satisfaction. If inaccuracies occur during scheduling and registration, these can create major data collection and/or financial issues, both for the patient and the hospital facility.

Essential demographic information health care organizations should capture on all patients at the point of access, includes:

  • Photo identification
  • Date of birth
  • Social Security number
  • Address
  • Employer

In addition, it is the role of Patient Access to capture the following relevant insurance information:

  • Insurance carrier and policy number
  • Reason for visit

Establishing financial clearance and proactively beginning the process of patient collections is an integral part of any Patient Access representative’s responsibilities. Attempting to collect the patient’s out-of-pocket costs at the point of service (POS) has been proven to improve collections and reduce workload later in the revenue cycle.

Establishing financial clearance often requires collecting specific documentation, including:

  • Service authorization based on referral or pre-certification information
  • Insurance verification based on benefits and eligibility

Payment, often referred to as POS cash collection, includes:

  • Collection of patient financial responsibility (i.e. copays, deductibles)
  • Applying any appropriate discounts
  • Resolution of prior account balances

To meet growing government requirements for public accountability and transparency, which help to ensure high quality care at a competitive price, hospitals in many geographic regions of the U.S. are now required to make their service pricing lists public. Today’s progressive Patient Access operation should be capable of producing accurate estimates based on this pricing, enabling patients to compare their facility with others.

It is also at the beginning of the Revenue Cycle Management process that forms or data are collected to ensure compliance with all federal and state regulations, including:

  • Financial responsibility (guarantor) acknowledgement form
  • Authorization to release protected health information (HIPAA)
  • Relation of admission/procedure to job-related injury or automobile accident
  • Advanced beneficiary notice (ABN) collection

The “Critical Middle”

Accurate and complete clinical documentation, coding and charging practices across the hospital and physician practice spectrum are captured in the middle of the revenue cycle. Fully documenting a patient’s care at this stage can improve outcomes in the revenue cycle down the line.

Clinical Documentation creates a thorough record of the diagnos(es) made, symptoms observed, treatment procedure planned and executed, care provided, the outcome of treatment and clinical assessment of the entire treatment process. As a general rule of thumb, “If it isn’t documented, it didn’t happen.”

Through Clinical Documentation Integrity the quality of the documentation is reviewed to confirm that it reflects the severity of illness and the intensity of services rendered. This step helps to ensure that the coding process results in the alphanumeric codes that will net appropriate reimbursement. Whether diagnostic or procedural, accuracy of coding is based on the provider’s documentation.

It may involve such coding types as:

  • ICD-10-CM (diagnostic)
  • ICD-10-PCS (inpatient procedural)
  • CPT (outpatient procedural)
  • HCPCS (supplies)

Concurrent review of the documentation is essential as it helps to fill in any gaps noted between provider documentation and services in real time.

It is also in the middle of the revenue cycle that charges are captured. Charges may be captured as a by-product of orders entered directly into the electronic medical record (EMR) system by providers or after the service is rendered and documented by ancillary staff. In some cases, they may be directly entered into the EMR.

One of the biggest challenges in the middle of the revenue cycle is ensuring that all charges are captured in a timely, consistent and accurate manner. Failure to document a service or use of vague descriptions can result in being paid less than an organization may be entitled to for provided services.

Typical recorded charges include:

  • Labs
  • Medications
  • Consultations (medical, surgical, behavioral health)
  • Procedures (medical, surgical)
  • Supplies

While some services may be considered “bundled,” all should be listed to ensure payment.

Case management also comes into play in two areas where facilities must be on high alert: length of stay and patient status assignment.

Case managers protect revenue integrity by focusing on issues that affect both, such as:

  • Utilization management
  • Discharge planning
  • Care coordination

By monitoring issues surrounding length of stay and/or patient stay classification, case managers prevent expensive write-offs that hospitals would otherwise be forced to absorb.

Vigilant case management can positively impact the revenue cycle by:

  • Decreasing denials
  • Appropriate billing and reimbursement
  • Reduction in payment penalties
  • Decreased length of stay
  • Decreased readmissions
  • Improvements in cost per case
  • Accurate case mix index (a relative value assigned to a diagnosis-related group (DRG) of patients)
  • Improved patient throughput allowing more admissions

Utilization Review (UR), which is also referred to as Utilization Management, involves a patient’s status assignment and the appropriate level of care determination. Case Management and Utilization Review work closely together to ensure appropriate status, with UR going deeper into hospital resources used and whether they were warranted.

Striking a balance is key, with the goal of any hospital to provide optimal care for its patients with the lowest amount of waste or extraneous costs.

While providers ultimately decide how long a patient needs to stay in the hospital and what resources are required, input from UR staff can assist with:

  • Decreasing avoidable days
  • Preventing delay in care
  • Preventing clinical denials
  • Identifying process improvement opportunities

Finish strong to achieve results

Once a patient is released and all documentation has been received from their care providers, the claims process begins. The goal at this segment of the revenue cycle is to receive timely and appropriate payment for services rendered. Claims Management tools can help speed the submission of claims by automating edits to increase clean claim rates.

As an industry standard, organizations strive to have a clean claim rate of more than 90 percent and a claim denial rate below 4 percent.

For hospital inpatient billing, an electronic UB-04 is used, which includes:

  • Patient demographic information
  • Provider/facility information
  • Dates of service
  • ICD-10-CM coding
  • ICD-10-PCS coding
  • Insurance information

Experienced health care team members trained in coding and billing oversee this process to help prevent incorrect filings that can be slow, exhausting and costly to resolve.

Working behind the scenes, Contract Management also plays an important role in billing, ensuring organizations are paid the appropriate reimbursement based on contractual agreements with government and commercial insurers.

Organizations that see the most success proactively monitor all contracts and keep the lines of communication open, with most reviewing them annually at a minimum.

Government insurers that Contract Management interfaces with in this process include:

  • Medicare
  • Medicaid
  • Tricare

Private Pay insurers include:

  • Health Maintenance Organizations (HMOs)
  • Participating Provider Options (PPOs)
  • Fee-for-Service plans (Indemnity)
  • Health savings accounts (HSA)

Denial Management comes into play once a claim that is submitted to an insurer is held up for further information or denied. Billers are assigned to do research when more information is requested. If denied, these claims may be handled by a biller or forwarded to a resource assigned to track denials.

As an industry standard, health care organizations aim for a claim denial write-off rate of less than one percent of net patient service revenue. If higher, this is an indicator that there are opportunities for improvement upstream in the revenue cycle process.

In this sense, Denial Management helps to improve the revenue cycle, helping organizations identify and understand breakdowns to streamline their processes.

Multiple appeals may be necessary to resolve a claim denial and should occur within a week, if possible, to avoid a dip in revenue balances. Identification of wins and losses is also helpful for future billing scenarios.

Rules and regulations from passage of the Affordable Care Act (ACA) and implementation of ICD-10, are cited as a cause for claim denial rates rising in recent years. The best defense is an effective denial management system to avert costly delays.

Payment Posting is also managed in this portion of the revenue cycle. When dollars are not readily available due to delays in payment posting, additional fees may be tacked on to the hospital’s current debt balance. Payment Adjustments also fall under this category to ensure both patients and insurers are billed accurately.

Like claims, payment remittance can be set up electronically, enabling staff to work through exceptions, which typically include:

  • Small balance write-offs
  • Matching total payments received in the system with the total payments posted per batch
  • Identification of zero payments, partial payments and low payments, as well as the type of resolution that may be required (i.e. denial management, referral to collections)

When payments due on an account age past a certain timeframe, Accounts Receivable or AR follow-up occurs. This may be necessary when tracking payments due from insurers or patients and can be done electronically, generating automatic notices at specific timeframes.

Collections become necessary when:

  • An insurer has not remitted the full amount due or refuses to pay a portion of the bill, which may transfer to the patient for payment
  • A patient has not remitted their full amount due

As an industry standard, health care organizations should strive for a goal of under 55 AR days, with less than 20 percent of total insurance AR aged greater than 90 days from all discharged AR that is not discharged not final billed (DNFB), bad debt or in credit status.

The old saying, “What gets measured gets done,” applies to any process, including revenue cycle management. Revenue cycle managers can benefit greatly from reporting and benchmarking, reviewing weekly or monthly internal reports to evaluate whether goals are being met and communicating results effectively to their teams.

Typical revenue cycle goals may include:

  • GOAL



  • Average days to drop a bill

  • Average number of days from the discharge until HIM/coding transmits codes to billing

  • Lower

  • Percent of claims denied

  • Total number of claims denied in the most recent 12-month period divided by the total number of claims filed in the most recent 12-month period

  • Lower

  • Productivity for coders

  • Number of charts coded per hour

  • Higher

Patient-to-Payment: A new perspective on the revenue cycle

Just as physicians must care for patients holistically, the revenue cycle must be holistically re-engineered throughout the patient’s journey, from patient access to accurate clinical documentation and coding to proper reimbursement, with each functional area positively impacting financial outcomes.

For instance, if errors occur in scheduling and registration, this will impact back-end claim processing, potentially resulting in a denial. The same can be said at the middle of the revenue cycle, where proper documentation is critical to support services performed. Ultimately, back-end revenue cycle tasks are dependent on front end accuracy to achieve timely reimbursements.

In its essence, Patient-to-Payment addresses these challenges through a comprehensive set of capabilities that come together holistically, helping to solve business problems across the entire spectrum of the revenue cycle. These capabilities include a range of solutions, from revenue cycle software to technology-enabled services, strategic outsourcing, advisory services, analytics and education.

nThrive’s Patient-to-Payment approach leverages these capabilities based on individual client needs, first identifying business issues and their root causes, followed by implementation of customized, integrated solutions that include one or more solutions to holistically transform your revenue cycle. Every nThrive implementation is unique, with some spanning our full Patient-to-Payment offering and including a combination of analytics, technology and services. Full business outsourcing engagements (FBO) are designed to re-engineer a health system’s revenue cycle from end-to-end, while others may deploy advisory, strategic outsourcing and education or some other combination.

To learn more about how nThrive’s Patient-to-Payment approach can help your revenue cycle function at its highest level, visit us at We’re here as an unbiased strategic partner to re-engineer your entire revenue cycle, empower your mission and improve your health system’s financial health. As a single source, we can create standardization and accountability across all of your revenue cycle systems, even bridging the gap between acute and ambulatory.

Want to read more about an integrated approach to Revenue Cycle Management? Check out these blogs and articles:

"From Patient-to-Payment: Why Providers Must Reinvent RCM." nThrive CEO Joel Hackney, HIT Leaders & News US, September 9, 2017.

"Three New Perspectives on the Revenue Cycle." nThrive, March 21, 2018.

"Look for a Partner That's Independent." Becker's Hospital Review, March 23, 2017.

"Ditch Your Singular Revenue Cycle Solutions for a Holistic Approach." Becker's Hospital Review, March 14, 2017.